ASNP member Theresa Varnet and family law attorney Marisa Higgins made the following comments at a session of the National Academy of Elder Law Attorneys' National Aging and Law Institute in Boston.

We are pleassd to have been invited to be amongst the first financial planners invited to join this organization.

Divorce is never easy, but if a child or spouse with special needs is involved, there are special considerations. At the same time, family law attorneys aren't always familiar with how to best protect a spouse or child with special needs during a divorce. Theresa Varnet, who practices in both Illinois and Massachusetts, is the mother of a child with special needs and chair of NAELA's Special Needs Law Section. Special needs planners can provide information to family law attorneys who may not understand the special needs planning vehicles that are available and the issues special issues families should take into consideration.

Varnet stressed that because no two cases are alike, it is important to look at each case individually to ensure that a divorce does not leave the individual with special needs in an even worse position. For example, if a court awards a spouse with special needs alimony, the income may affect the spouse's ability to get Medicaid. Similarly, when a divorce involves a child with special needs, the first thing to look at is whether the child is under or over age 18. If the custodial parent of a child with special needs receives alimony, the child who is under 18 may not be eligible for Social Security Income (SSI) or Medicaid because the parent's alimony is considered monthly cash income. Once the child reaches 18, alimony paid to a parent will not affect SSI.

As an alternative to paying alimony in cases where it could affect eligibility for benefits, Varnet suggested structuring the divorce agreement so that the non-custodial parent or the spouse without special needs pays for a non-cash alternative, such as the mortgage, childcare, special services, or a care attendant. Another option is to consider the family's natural support system. A settlement agreement could include payments to grandparents or siblings who are caring for the individual with special needs.

But such in-kind payments can only be done if the divorcing parties are non-adversarial because this type of payment is difficult to enforce. There also is a tax issue with this solution because alimony is tax deductible for the paying spouse, while in-kind donations are not deductible. This means the spouse receiving the alimony may have to accept a lower amount to make up for the lack of a tax deduction for the paying spouse.

If the divorcing parties are adversarial and the paying spouse cannot be trusted to make payments without a court order, then the court may have to award alimony or child support in the form of cash. Cash payments are easier to enforce because the court can order the paying spouse's paychecks docked. In this circumstance, one way to preserve benefits is to put the support payments into a first-person special needs trust.

Even if the parties are not adversarial, a third-party special needs trust can be a good option in some circumstances. For example, if there is an asset that the non-custodial parent is required to leave to his or her children, the parent can leave it to the child with special needs in a third-party special needs trust, with the remainder going to the other children.

Not every individual with special needs will qualify for a special needs trust. For example, a spouse's condition may not have deteriorated enough to qualify for a trust, but his or her condition could worsen. In this situation, Varnet suggested placing alimony in a discretionary support trust that has a trigger clause to put the assets into a special needs trust when the spouse becomes disabled.

Because there are so many unknowns when dealing with an individual with special needs, Varnet stressed the importance of keeping settlement agreements flexible so the parties can go back to court if need be. Spouses will likely want to revisit a settlement agreement when their child with special needs is about to turn 18, so the settlement agreement should preserve the rights of the parents to do that.

In her portion of the session, Higgins discussed the fact that many states, including Illinois and Massachusetts, have laws that recognize the obligation of parents to provide support for an adult disabled child. If a court orders support paid under one of these laws, this can jeopardize the child's right to receive SSI or Medicaid. For the amount of support paid, SSI will make a dollar-for-dollar reduction in benefits. Instead of being paid directly to the child, the funds should be put into a special needs trust. The court could also order the parent to pay for social services or recreational activities instead of paying cash.

Finding a fair and equitable agreement when parties are divorcing is often a challenge. When parents of a child with special needs separate and divorce, the challenge is magnified. Based upon both our personal and professional experience, it is critical to bring parents into agreement on a plan that does not take sides, but focuses on representing the needs of their child.

This means planning for families with unique sets of circumstances. We can help.

Based upon our understanding of the obstacles children with special needs may have in growing up, we can describe and define the needs of the child.

Based upon the child’s unique situation, we can quantify the amount of financial support necessary to meet these needs, for the short- and long-term.

We will connecting parents, when interested, with various agencies that provide support services.

We inform parents about available government programs.

Importantly, we not only define the need but can work with the parties to realistically plan and make it achievable.

We welcome an opportunity to discuss how our services can help in cases of divorce and provide the best plan for a child’s lifetime supports. As a basic resource not customized for families of individuals with special needs, download the pre-divorce checklist below.

Finding a fair and equitable agreement when parties are divorcing is often a challenge. When parents of a child with special needs separate and divorce, the challenge is magnified. Based upon our experience, both personal and professional, it is critical to bring parents into agreement on a plan that does not take sides, but focuses on representing the needs of their child.

This means planning for families with unique sets of circumstances. Some ways we may be able to help are:

Defining and describing the needs of the child based upon our understanding of the obstacles children with special needs may have in growing up.

Connecting parents, when interested, with various agencies who provide support services.

Informing parents on available government programs.

Based upon the child’s unique situation, quantifying the amount of financial support necessary to meet these needs for the short- and long-term.

Importantly, we not only define the need but can work with the parties to realistically plan and make it achievable.